Mortgage rates have been plunging — giving fresh hope to those who have been waiting for a home loan freeze to end.

After three years of bringing in tough new checks on borrowers, banks and building societies have just started slashing rates.

For those with a deposit of 10 per cent, there are 65 more mortgages than there were at the start of 2012, according to data firm Moneyfacts.

It’s still tough to get a home loan, and doom-mongers claim that becoming a homeowner or trading up is impossible. But the reality is that the availability of cheap deals is improving.

The best five-year fix for a borrower with a 10 per cent deposit is with Loughborough BS at 4.24 per cent, which comes with a £599 fee. Monthly payments on a typical £150,000 loan repaid over 25 years are £812 and the total cost is £49,319.

The society also has a three-year fix, also for borrowers with a 10 per cent deposit, at 4.09 per cent with a £499 fee. Monthly repayments are £799 and the total cost is £29,263.

For those with just a 5 per cent deposit, Newcastle BS has a fee-free, two-year fixed rate deal at 5.99 per cent. Monthly payments on a £150,000 loan are £966 and the total cost is £23,184.

The reason for these recent falls is the Government’s Funding for Lending scheme, which has given the banks a source of cheap cash. Estate agents report increasing numbers of buyers and sellers. Many have been stalling on a move for 18 months, but have now decided to stop waiting for the market to improve and just get on with it.

Movers with large chunks of equity can really benefit from low rates.

Top deals include a five-year fixed rate through the Co-operative at 2.79 per cent — although you need a 40 per cent deposit to qualify. Monthly payments on a £150,000 loan are £695 and there is a £999 fee. Total cost is £42,699.

HSBC: Has a rock-bottom 1.99% rate on offer

For those with a 25 per cent deposit, Yorkshire BS has a five-year fixed rate at 2.99 per cent with a £995 fee. Monthly payments are £711 on a £150,000 loan and the total cost is £43,655.

Yorkshire BS has launched a 1.99 per cent two-year, fixed-rate deal for borrowers with a 40 per cent deposit and there is a £995 fee. Monthly payments are £635 and the total cost is £16,235.

HSBC has a rock-bottom two-year fix at 1.99 per cent. This is for borrowers with a 40 per cent deposit who can stump up a £1,999 fee — or £1,499 for HSBC current account customers.

If you don’t plan to move for a long time and want to be sure about the size of your monthly payments, there are new longer-term deals.

For example, Leeds BS has just slashed the rate on its ten-year mortgage to 4.29 per cent for borrowers with a 25 per cent deposit. Monthly payments are £816 on a £150,000 loan, with a £999 fee. The total cost over the decade is £98,919.

But there are still problems in the housing market. Although nationally average property prices crept up by just under 1 per cent last year, this doesn’t reflect the huge differences from region to region.

In Hull, a typical detached home cost £162,547 in January 2007. Today, the same home costs £131,467 — 20 per cent less — according to Land Registry figures.

A typical family home in Greater Manchester has tumbled by nearly £50,000 since 2008, down to £212,685.

Meanwhile, in London and the South-East house prices have climbed steadily.

Ed Stansfield, chief property economist at leading consultancy Capital Economics, says: ‘All the evidence shows house prices are still far too high in relation to people’s incomes.

‘At the very least, homeowners need to be braced for another five to ten years without seeing any rises at all in the value of their property.’